As I flagged in yesterday’s post, the Australian beer industry looks a prime target for takeovers by international players, as it highly profitable and fairly isolated from the major international brewers. There has been much talk about a potential takeover of Foster’s by one of the big global players, such as Molson Coors (who have recently taken a 5 percent holding). Well, today, we’ve seen the other big player in the Aussie market, Lion Nathan make a bid for Coca Amatil.
This is a rather complex international business scenario (please bear/beer with me).
Lion Nathan were originally a merger of New Zealand’s two biggest domestic brewers. They subsequently became a major presence in Australia in 1990 via the acquisition of the nation’s second largest bundle of brewing assets (principally Tooheys and Castlemaine Perkins). Their brands currently represent just over 40 percent of the Australian beer market. Over time, the major shareholder of Lion Nathan has become Japan’s
second largest brewer, Kirin (itself part of the Mitsubishi group). Kirin currently hold a 46 percent stake in Lion Nathan. Kirin also own National Foods, Australia’s largest dairy and juice company (acquired via Kirin’s holding in Filipino brewer San Miguel.
Coca Cola Amatil (CCA) are the bottlers and distributors of the ubiquitous black fizzy stuff in Australia, New Zealand, Fiji, Indonesia, Papua New Guinea, and South Korea. They also have their fingers in the bottled water, juice, canned fruit and coffee markets down under. They recently entered a joint venture with global brewing giant SAB Miller to distribute a couple of major labels in Australia (Peroni and Miller), and also took over a fledgling craft/microbrewer Blue Tongue. The major shareholder (at around 30 percent) in CCA is The Coca Cola Company back in the US (the folks who own the Coca Cola brands)
So is this the consolidation and acqusition play we expected? And is it all about beer assets?
That’s the tricky question here. The CCA/SAB Miller joint venture was supposed to see some competition for Foster’s and Lion Nathan, as CCA’s distribution network into retailers should have overcome the typically high barriers to entry in the market (alas, beer vending machines were fairly unlikely under Australian liquor licensing laws).
If Lion Nathan were successful in acquiring CCA we would be back to square one in terms of competition in the Australian beer market. It is hard to imagine Lion Nathan placing too much emphasis on the minor Peroni, Miller or Bluetongue brands. They may find some use for the CCA distribution network however.
It is more likely that this is a bigger food and beverage story. Kirin would be building a very considerable holding in the non-alcoholic beverages segment if it ended up owning both CCA and National foods. The extent of complementarities of assets across the alcoholic and non-alcoholic beverage segments is still unclear, but market power is market power, and this new beast would be wielding a hell of a lot of it with Australian retailers.
This tale highlights the complexity of telling (and researching) single-industry stories, at either the domestic or international level. The reality is that firms often reach across markets, in terms of both products and countries (I have not even mentioned the additional burden of wine holdings for the Australasian brewers). Trying to untangle motives is a real challenge for scholars (and competitor firms).
It will be intriguing to see the next move in this chess game. The big international brewers are surely still circling.
International BS Blog 
